Member Info for Tornadotony

BPat

I do not know what the depreciation costs are in the accounts. What I do know is that you take gold sold price minus AISC and quite often the bottom line is half that figure remaining with tax and quite a few other things taken off. It is the model I work with. Companies can manipulate low AISC by doing less exploratory drilling to recover ounces mined out and doing resource to reserves conversion. I do recognise that 100% nameplate on all assets is 190,000 ounces and I was only using your conservative figures. Everybody has their own models. Always helpful to have a high, middle and low model. It results in better investing returns managing risk, managing fear and greed and to a degree understanding sentiment. Tony

Bpat

No, the range is data dependant. If production is really good and the AISC holds well and Mali mine holds up as well then it can do better. The improvement is linked to converting debt enterprise value into SP enterprise value as well. When debt goes down SP goes up.

BPAT

Taking an AISC of $1200 and gold price of $2400 and 150,000 ounces sold.

Non AISC has a $15M administration charge as it is separated from the 3 projects.

Of the $1200 not in AISC they have around half the remainder going to governments for both mines and it is similar for nearly all African gold miners. 90M profit becomes $75M after administration charges. On top of this we have staff bonuses and options to be paid out. They also have to pay out for any Capex that is non-sustaining. After all of this the net profit is probably around $65M. If you have $153M debt at 12% rate involves just over $18M debt interest and a principle pay off of $47M. The following year say they get another $54M principle paid off and here is where year 3 comes in with the remaining $40-42M paid off and the company has around $12-15M which is likely to needed replacing extra ounces mined out on drilling to build up reserves. Around year 4 it becomes a serious cash cow. That is the core problem I make here, it takes 3 really good years to hit the gravy train and you have someone like Dan Betts in the pilot seat. Not a straight forward ride. The market will cap hummingbird SP until ounces mined really do stack up and Coris will want a cheap price to take entire ownership to cover debts if Betts messes this all up. The low SP imop puts off anybody doing a placing or thinking it will bail them out again. Coris have Betts on a tight lead and that is probably now in the interest of PIs as well. Unfortunately there is no dividend to reward patience and it will be the savvy traders who will have nipped in and grabbed a half penny gain to stay put and rely on trading within the 6-8p range.

Tony

Playing out where the top of the range is. Yes it is likely to go back down again to retest the bottom. Chose not to trade any gold miners as gold puts in a top this week. Not a good idea buying top of the market on gold and smart ones will sell off again unless holding for divis and taking an investor not a trader approach on gold miners. Retreat on gold runs to near Christmas imop. There was a clue where this was going this morning hence my comment on trading range.

Punter, Coris will not want a placing and nether the 42% shareholder. Instead if Betts needs more money he goes to Coris and they roll out the debt over more time and more gold ounces get devoted to paying Coris debt repayments. Can you see who benefits hugely from all this and why the share price is capped by all the debt. It is like a mortgage where someone has to add time extension on for previous gaps in payments. The debt on the house is still there.

What I wrote yesterday looks accurate. Coris have a lot of control in the company and Betts is very useful to them. The company will be paying out on debts well over two years approaching three when the remainder is resolved. No placing as it needs majority shareholder support. Expect to see this share to be in a range bound for some time very much controlled by the major share holder.

Https://interestingengineering.com/transportation/china-aces-maglev-train-test

I gather internal demand is rising sharply in China for use on a super railway construction. The amount available to export for NdPr will soon be near zero. The West will need its own source of supply in 2025. Come on RBW get moving to production, get finance asap.

Goldinvestor 7

Nobody gets the call right 100% of the time. Everything one scribing here is giving an opinion and everyone is free to have their own views.

If we deal in facts the original 120,000 tonnes of ore on the ROM Pads was cleared at the end of Q1. The company decided low grade ore was not waste ore and processed it and got dreadful results ,but it did mean testing out plant on low grade feed material. A second 120,000 tonnes was processed up to the end of July and what is clear was that the feed grade was much higher than original material and gives a run rate of 1200 ounces a week. A third batch of 120,000 tonnes gets processed in the coming months. The company has only said they believe the feed grade on this pile of ore is higher than used in Q2 and July. If the feed grade was the same as in Q2 for the next 21 weeks produces 25,200 ounces and over 23,000 ounces was produced so far. The 50,000 ounce production target is therefore realistic. A clever CEO may want to start under promising and should have perhaps guided 50,000-55,000 ounces.

Coris Bank will give Betts whatever he wants at their interest charge rates. Instead of the bank making lots of money over two years it becomes two years and nine months say and the only delay in financing is Betts biting the 12-12.5% bullet and I think he will add more to the balance sheet to do more drilling and a higher gold price invites that kind of risk behaviour. I do not see the company going bust they are not as bad as Caracal, Scots gold whoever else got delisted last year. The biggest shareholder loaned the company $10M and bought $1.4M in shares. Despite the institutions selling 38M Hummingbird shares in Q2 and others institutional funds only buying 1M, we do not know what the trend will be during Q4 of this year. PIs here should except a trading range to be in play on this stock as sellers will appear until more evidence emerges in the results to justify better valuation. All the best Tony

Imagine the scene inside Corus bank. It is late Friday afternoon and the senior client manager does a high 5 with all the staff. He gets out a dog lead and collar from the top drawer and yells out Dan Betts is my bit**.

Assuming the following;

Both mines together in future years deliver 150,000 per annum as a mean average.

Gold stays at 2300-2500 range.

Debt is $200M worse case.

Interest charge on debt is 12% per annum.

AISC mean average 2025-2029 stays at $1200.

Government take 50% overall in profit above AISC.

Capex is spent to replace mined out ounces.

Business admin is $15M per year unchanged.

2400 ( gold sold) - 1200 (AISC) - 600 (government take) = $600 per ounce mined.

$600 x 150,000 = $90M profit -$15M admin charge not in AISC.

$75M total. Debt charge year 1 is $20M. Net debt becomes 145M end of year 1.

Debt charge year 2 is $12.5M. Net debt becomes 82.5M

Debt charge year 3 is $5M. Net debt becomes 12.5M

Debt is paid off in year 4 and is net cash in Q2.

Of course if they hit 200,000 ounces per year as planned it would be quicker and debt is paid much earlier in year 3.

The probability however with Dan Betts getting it right 2- 3 years running would be rather unique.

It is probably wise to model on 150,000 ounces and being patient an additional year. Once the debt is paid the company is worth 9.3p and grows at 9.3p per annum for every year they can continue 150,000 ounces debt free as a cash cow rather than a dog share owned by Coris.

Thank you so much pathfinder much appreciated.

Tony

Sundrum

Pensana development plans were to take off on 1 September as depicted in their timetable of developments. The funders must have indicated a date of a final funding decision this month. If that is not the case what happens? Will Pensana present a different forward plan. Tony

A lot of companies are changing their CEOs. BT is not the person who can move this company forward. The issue is whether someone with the right qualities can drive this company forward and has a realistic creative vision that will drive up value here. Will Nanoco find them and will they want to take on that role with this company with cash in the bank?

Eloro

Does it make you happy that the entire sector from rare earths mining, to battery processing manufacturers and just about every part of the sector to electrify a different future to reduce carbon dioxide emissions is failing. A good chunk of it is down to elite financial groups that prefer investing in wars or using power to control populations by limiting future food supply, water as well as energy. They also like to fund artificial Intelligence as a means of controlling the masses as well. There is nothing to celebrate here and we see project after project going under because governments across the globe can not agree anything. We have leaders that basically think for a whole nation through dictatorship and we have leaders that serve an oligarchy/plutocracy on similar principles. It leaves many feeling hopeless on the future although perhaps our own resilience fights against what we see as utter stupidity and greed and a desire for yet more power.

I am glad MG are not selling and that Angola Government and sovereign funds are throwing the kitchen sink at the mine project. At least there is integrity behind some peoples efforts. In my own career I always went the extra mile, I always felt I was fortunate to serve my country and the public and all the communities and that as a person I was honest. 80 years ago in Normandy, 1000's of young men gave their lives for a different alternative future. What saddens me is the sacrifice so many gave in that earlier generation and so many today have take it all for granted and can not see that similar issues arise today. I really hope you find something better to do Eloro then just give your opinions here. It only takes one funding source to say lets build the project, after NdPr prices are starting to rise again. Tony

I wish to God he would leave tomorrow. A CEO who has been riding the backs of everyone else. What value as a person did he personally achieve that was any better than a Del boy second hand car salesman without the humour.

Betts hits targets and keeps winning the bet is great and rampers are in joy.

Betts screws it all up again or other risks materialise and the debt goes screaming higher and the stock delists.

Betts gets less bad luck, but everything struggles along. Debt slave doggy share still in business, but a semi zombie and stays roughly where it is a few pennies a share. Banks suck the life out of it with 9-10% returns and Betts plays the role of being their really useful idiot. (Hence why bet 2 option may not happen).

Using the finance data in the annual report gives the following calculations.

At $153M debt the share value on net assets is 8.4p.

At $175M debt the share value on net assets is 6.6p.

At $200M debt the share value on net assets is 3.5p.

Mining costs exclude $13.5 M on leasing equipment from AISC. Administration costs in 2023 were $17.1M and I believe are not included in AISC.

All IMOP of course.

Tony

I forgot to say my comment are just opinion and that you should all do your own research.

Facts

1. 5% Royalty to Guinea Government.

2. 1% of profits go to local development fund.

3. Tax rate on profits is 30%

4. The Guinea Government has 15% free carry interest.

Overall net profit is halved which is normal for most gold mines in Africa. 20May 2021 RNS.

5. Coris Bank charge 8.5% annual interest on debt which stood at $135M in January 2024.

6. Original payback on construction was based on AISC below $1000 for the mine and average AISC forecast is now $1400.

7. Although reserves has increased the grade per tonne was reduced significantly from 4.38g/t to 3.85g/t. It supports the evidence of higher levels of stripping to get gold mined out which is probably obvious in having a larger operational fleet. It also fits with much higher AISC projections for the mine in future.

8. The upper collar price was $2150 for gold sold on both mines for 60,000 ounces.

9. The new mine was said to deliver 4,800 ounces in July. This could have only been achieved with much higher grade ore than 2.64 g/t stated for H1. The run rate if maintained for all of the remaining 2024 would just hit the bottom end of target of 50,000 ounces.

10. I have estimated a best outcome from profit if low end targets are hit at $27M from both mines for all of 2024. $71M was due for debt repayment to Coris and has to be rolled over. Debt was stated at $153M unaudited accounts and has limited visibility on conditions of what is owed to third parties.

Management past performance is a concern. Reserves were stated to comply with JORC 2012 standards. Pit shell design for the new mine has apparently taken into account antisanal past extraction. The footnote indicates this was provided by another company under contract.

Overall the company should not go bust on improved performance however it could take some time for the share price to recover and reacquire the earlier prospective outlook. The company is doing the usual to shore up its balance sheet. It will take 3 years to clear all the debt. The share price is likely to be capped until the debt is reduced and mined ore is replaced with new reserve ounces. The biggest risk is the non-delivery by senior management.